Bihar State Electricity Board & Anr Vs. Umi
Special Steel Limited  Insc 543 (8 November 2000)
Khare, & S.N. Variava. S. N. VARIAVA, J.
This Appeal is against an Order dated 14th August, 1991 passed in Letters Patent Appeal No.
69 of 1990, by which the Appeal has been dismissed in limine. The Letters
Patent Appeal was against an Order dated 20th January, 1989 read with an Order dated 2nd May, 1990, wherein an Appeal filed by the
Respondent had been allowed.
stated the facts are as follows: On 12th January, 1972 the Appellants and the Respondent
entered into an Agreement whereunder the Appellants were to supply to the
Respondent High Tension electricity for a contract demand/load of 1500 KVA at
11000 volts. The relevant Clauses of the Agreement are 4(a), 8 and 9. They read
as under: "4(a) The consumer shall pay to the Board for the energy so
supplied and registered as aforesaid at the rates given in the Schedule,
provided that the minimum charge as specified in the schedule appended hereto
shall be paid irrespective of whether energy to that extent has been consumed
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Agreement shall be ordinarily in force for a period of not less than 3 years in
the first instance except in exceptional cases in which written consent of the
Board will be taken, from the date of commencement of supply i.e.
and thereafter shall continue from year to year until the Agreement is
determined hereinafter provided.
consumer shall not be at liberty to determine this Agreement before the
expiration of 3 years from the date of commencement of the supply of energy.
The consumer may determine this Agreement at any time after the said period on
giving to the Board not less than twelve calender month's previous notice in
writing in that behalf and upon the expiration of the period of such notice
this agreement shall cease and determined without prejudice to any right which
may then have accrued to the Board hereunder provided always that the consumer
may at any time with the previous consent of the Board transfer and assign this
Agreement to any other person and upon subscription of such transfer this
Agreement shall be binding on the transferee and Board and take effect in all
respects as if the transferee had originally been a party hereto in place of
the consumer who shall thenceforth be discharged from all liability under or in
respect thereof. If a consumer, whose line has been disconnected does not apply
for reconnection, in accordance with the law within the remainder period of the
compulsorily availing of supply or that of notice whichever be longer, he will
be deemed to have given a notice on the date of disconnection in terms of the
aforesaid clause 9 for determination of the agreement." Thus it is to be
seen that even though energy may not be consumed minimum charges had to be
paid. The Agreement was to be for a period of 3 years and thereafter to
continue from year to year until it was determined. Under Clause 9 the consumer
could not determine before the expiration of 3 years but could determine, after
the expiry of 3 years, on giving a 12 months' previous notice in writing. Also
if the line has been disconnected, and the consumer did not apply for reconnection
within the remainder period of compulsory availing of supply or of notice then
the date of disconnection shall be deemed to be the date of notice for
determination of Agreement.
1973-74 the Respondent addressed several Letters to the Appellants to reduce
the contract demand from 1500 KVA to 1000 KVA. The Respondent also requested
the Appellants to reduce the period of the Agreement from 3 years to 2 years.
Ultimately, by a letter dated 12th February, 1974 the Respondent requested that
the Agreement be determined with effect from 1st March, 1974 and that
thereafter they be given a temporary supply of 500 KVA. The Appellants did not
agree to this. It is an admitted position that, in spite of Respondent'
letters, the Agreement subsisted till February, 1975. On 24th February, 1975 the Respondent addressed a Letter
to the Appellants, which reads as follows:
This is for your kind information that from 1.3.75 we shall stop availing
construction power being supplied to us at 33 KV 3 phase 50 c/s A.C. from your
sub-station at Bhurkunda. Please therefore arrange to disconnect the supply
from 1.3.75 and take charge of your metering equipment installed at our
end." Pursuant to this request the Appellants disconnected the
electricity. In May, 1975 the Appellants submitted to the Respondent a Bill
which, inter alia, contained an amount towards the minimum charges for the
period 1st March, 1975 to 28th February, 1976. As the amounts of the Bill were not paid a Notice
dated 18th May, 1976 was addressed by the Appellants to
the Respondent. As the payment was still not made a Recovery Certificate was
issued on 2nd August,
Respondent then filed a suit claiming that with effect from 24th February, 1975 the Agreement stood terminated. The
Respondent claimed that they were not liable to pay the minimum charges for the
period from 1st March,
1975 to 28th February, 1976. The Suit came to be dismissed by
the trial Court on 31st
Respondent then filed an Appeal. By a Judgment dated 28th January, 1989, the High Court held that the
parties had agreed that a period of 3 years be reduced to 2 years and that such
a novatio was permissible in law. The High Court held that it was always open
to the parties to change the Contract by mutual consent and that the Appellants'
act in disconnecting the electric supply and stopping supply of electricity
amounted to bringing the Agreement to an end by mutual consent. The High Court
held that the Appellants had, therefore, terminated the Contract and could not
have any legal right thereafter to ask for performance of the Agreement. The
High Court held that, in this view of the matter, Clause 9 of the Agreement was
not of much importance as it was merely an enabling provision which perished
along with the Contract. The High Court then referred the matter back to the
trial Court for leading additional evidence and for calculating the amounts
payable by the Respondent to the Appellants for the period up to 1st March, 1975.
trial Court merely held that Respondent were bound to pay all charges prior to 24th February, 1975 and send the case back to the High
Court. The High Court by a Judgment dated 2nd May, 1990 directed the Respondent to pay
amounts payable up to 1st
March, 1975 and
directed the Certificate Officer to refund the balance amount to the
this Order the Appellants filed Letters Patent Appeal which was dismissed by
the impugned Order dated 14th
August, 1991. Hence
this Appeal before this Court.
been seen the Agreement was to be for a period of 3 years and was to continue
from year to year till determined in the manner provided under the Agreement.
the subsistence of the Agreement the minimum charges had to be paid. Clause 9
of the Agreement clearly provided that during the first 3 years the Agreement
could not be determined. Thereafter the Agreement could be determined only by
giving a notice in writing of 12 months. Clause 9 also provided that though
there was disconnection of electricity, still the Agreement would subsist for a
period of 12 months from the date of disconnection. Before us it is admitted
that the Agreement subsisted till February 1975.
the finding of the High Court that there was novatio by mutual consent and the
period was reduced to two years is clearly erroneous. The High Court has also
seriously erred in not noting that disconnection of electricity is different
from termination of Agreement.
during the subsistence of the Agreement there could be disconnection of
electricity. The Agreement envisaged that the consumer may not consume
electricity during the period of the Agreement. Such non-consumption may be due
to disconnection or for any other reason. It is because of the possibility of
consumer not consuming electricity that a provision for an annual minimum
charge has been made.
of electricity does not amount to termination of the Agreement. This elementary
principle has been completely lost sight of by the High Court.
have set out above the letter dated 24th February, 1975. As seen there is no request for
termination of the Agreement as contemplated by Clause 9 of the Agreement. In
fact, there is no request for termination at all. By this letter all that the
Respondent are asking the Appellants to do is to disconnect the supply. The Appellants,
pursuant to this request, had disconnected the supply. But this does not mean
that the Agreement stood terminated. The Agreement would continue until it was
determined by the parties. The only method of termination was Clause 9 of the
admittedly no notice in writing of 12 months was given, the Agreement would
terminate, as per Clause 9, after a period of 12 months after disconnection.
Therefore, the Agreement subsisted till 28th February, 1976. As the Agreement subsisted till
this date the Appellants were entitled to claim the annual minimum charges for
the period from 1st
March, 1975 to 28th February, 1976. The High Court has seriously erred
in holding otherwise.
this view of the matter the Judgments of the High Court dated 14th August, 1991, 20th January, 1989 and 2nd
May, 1990 require to
be and hereby set aside. It is held that the Respondent are bound to pay to the
Appellants the annual minimum charges for the period 1st March, 1975 to 28th
must be mentioned that this Court had by an interim Order dated 28th January, 1992, as clarified by an Order dated 5th February, 1992 permitted the Respondent to
withdraw the amount of the annual minimum charges which had been recovered from
them. The Respondent were directed to furnish a Bank Guarantee of a Nationalised
Bank to repay the amount with interest at the rate of 12 per cent per annum.
Respondent have since recovered the amount. They are, therefore, bound to repay
the amount with interest at the rate of 12 per cent per annum, from the date of
recovery of amount from the Recovery Officer, till payment.
requests that the Respondent be permitted to repay the amount in six
installments. We, therefore, direct that the annual minimum charges for the period
1st March, 1975 to 28th February, 1976 with interest thereon at the rate of 12 per cent per
annum from the date the amount was recovered by the Respondent from the
Recovery Officer till payment shall be paid by the Respondent to the Appellants
in six equal monthly installments. The first installment to start with effect
from 1st January, 2001.
and every subsequent installment to be paid by the 1st day of each succeeding
month. In the event of any installment not being paid within time, the entire balance
amount, then remaining due and payable, shall become payable forthwith. The
Appeal stands disposed of accordingly.
will be no Order as to costs.